Cineworld lifted by film stu­dio rul­ing

The Daily Telegraph - Business - - Business - Louis ash­worth

CIN­EMA chain Cineworld was the big­gest FTSE 250 riser af­ter a US fed­eral judge struck down a long­stand­ing rule that said movie stu­dios are not al­lowed to own cine­mas.

It shares surged by nearly a fifth amid talk that the lift­ing of the re­stric­tions, which hark back to 1948, could mean that a ma­jor stu­dio might swoop on some of Cineworld’s lo­ca­tions.

But an­a­lysts have poured cold wa­ter on the like­li­hood of a surge in sales – par­tic­u­larly as the pan­demic drives stream­ing de­mand while peo­ple avoid go­ing out to the movies.

Mor­gan Stan­ley’s Ed Young said the Cineworld price move looked over­done as the movie in­dus­try fo­cuses on di­rect-to-con­sumer of­fer­ings.

“We think the case for stu­dios buy­ing ex­hibitors has been weak­ened by the de­vel­op­ment of pre­mium video on de­mand,” he wrote in a note to clients.

“[Covid-19] has ac­cel­er­ated the mat­u­ra­tion of the cin­ema in­dus­try, and with in­creased fo­cus on di­rect-to-con­sumer stream­ing … the ap­peal for stu­dios to ver­ti­cal in­te­gra­tion has re­duced, not in­creased.”

The group closed up 6.2p at 41.1p.

Close be­hind was ship­ping ser­vices provider Clarkson, which jumped 255p to £23.55 af­ter the group re­newed its div­i­dend fol­low­ing a strong first-half per­for­mance.

In what it called a “ro­bust” show­ing, the FTSE 250 com­pany raised its first-half profit be­fore tax to £20.9m, from £19.2m last year.

It hailed “par­tic­u­larly strong trad­ing” in its broking divi­sion that off­set pres­sures else­where.

Chief ex­ec­u­tive Andi Case said the group has “de­liv­ered 17 con­sec­u­tive years of div­i­dend growth”.

It an­nounced plans to pay an ex­tra div­i­dend equiv­a­lent to its de­ferred 2019 pay­out. Liberum’s Ger­ald Khoo said a sec­ond virus wave could still put pres­sure on the group.

Trans­port com­pa­nies rose as in­vestors re­acted to the Gov­ern­ment’s ad­di­tional £256m bailout for Eng­land’s bus and light rail sys­tems to help them keep op­er­at­ing through the pan­demic.

The pack­age, which does not cover Lon­don, will in­clude a fur­ther £27.3m weekly for buses un­til fund­ing is “no longer needed”, the DfT said. Go-Ahead Group climbed 60.5p to 652.5p, while First­Group rose 2.2p to 41p.

On the FTSE 100, bank­ing stocks in­clud­ing NatWest, Lloyds Bank­ing Group and Bar­clays rose, shrug­ging off a re­port in The Sun­day Times that warned of a “sec­ond wave” of pay­ment pro­tec­tion in­sur­ance claims.

Good­body’s John Cronin said: “Time will tell as to whether or not this is a ma­te­rial is­sue but we sus­pect man­age­ment teams will strongly play down the risks for now.”

NatWest rose 3.5p to 114.1p, while Lloyds added 0.6p to 28.4p and Bar­clays rose 2p to 106.6p. Man­u­fac­tur­ing soft­ware maker Aveva also climbed, ris­ing 59p to £45.64, af­ter con­firm­ing over the week­end that it is in talks over po­ten­tially ac­quir­ing SoftBank-backed group OSI­soft.

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